Ventas, Inc. (NYSE: VTR) (“Ventas” or the “Company”) said today that it and Kindred Healthcare, Inc. (NYSE: KND) (“Kindred”) have entered into a new lease (the “new LTAC Lease”) for ten long-term acute care hospitals (“LTACs”) owned by Ventas, for initial rent of $28 million annually commencing May 1, 2013. The new LTAC Lease covers all ten LTACs whose lease term is currently scheduled to expire on April 30, 2013. The new LTAC Lease has an initial term of ten years and contains annual CPI-based escalations ranging from zero to 4 percent. Rent for these ten LTACs for the period from May 1, 2012 through April 30, 2013 is $22 million.
“We are very pleased to have reached a mutually beneficial new lease agreement with Kindred, who is the best care provider for these ten LTACs, at a significant rent increase,” Ventas Chairman and Chief Executive Officer Debra A. Cafaro said. “We are excited to launch our re-leasing effort for 54 skilled nursing facilities and expect to successfully lease those licensed assets to suitable care providers.”
Because the new LTAC lease with Kindred takes effect in 2013, it will have no impact on Ventas’s 2012 normalized funds from operations (“FFO”). On a full year basis, the new LTAC Lease is expected to be approximately $0.02 per share accretive.
Update on 89 Ventas Assets Leased to KindredWith respect to the 89 healthcare facilities Ventas leases to Kindred whose lease term was set to expire on April 30, 2013: Kindred will remain the tenant for 35 assets through both the previously exercised lease renewals and the new LTAC Lease, for total annual rent commencing May 1, 2013 of approximately $76 million. Total annual rent for those assets for the period commencing May 1, 2012 is $69 million.
|($ in millions)|
|Cash Rent||Expected Cash Rent|
|Facilities||5/1/12-4/30/13||5/1/13-4/30/14||$ Change||% Change|
|Renewed (19 SNFs, 6 LTACs)||$47||$48||Contractual Escalation||Contractual Escalation|
|New Lease (10 LTACs)||22||28||$6||27%|
|Total Renewed / New Lease||69||76||7||10%|
|Assets to be Marketed||57||N/A||N/A||N/A|
|Total Renewed / New Lease as a %|
|of Total 5/1/12 Annual Rent||55%||60%|
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